"Ceasefire at the LoC has been holding and everybody acknowledges that the incident level has gone down significantly, that is good. We must keep it there, particularly after the snow melts," Powell, who was in Islamabad on the final leg of his three-nation South Asian tour, told PTV after his talks with the Pakistani leadership.

He declined to get into difference between India and Pakistan over terming Kashmir a core issue. "Kashmir issue is the one that has been a problem between the two countries for over 50 years. It is a problem that they ultimately have to solve. I hope that the process that has been initiated by Prime Minister (Atal Bihari) Vajpayee and President General Pervez Musharraf on January 6 will lead to solutions," he said.

Earlier, addressing a joint press conference with Kasuri, Powell said the Kashmir issue was "essentially a matter that has to be solved between the two sides or it will not be resolved in a satisfactory way".

Powell hoped that both sides would take into account the "needs, desires, aspirations and concerns of the people of the region".

"Everyone understands the importance of Kashmir to this dialogue," he said, adding it was significant that Vajpayee and Musharraf met in Islamabad, which was "a historic step on their part".

"The United States will be watching with great interest and try to help both of our friends," he said.